The People's Bank of China has been buying gold for its reserves for 24 months in a row. That's two years without a single break. During the price pullback, it didn't slow the pace but increased the volume of purchases.
A pullback is a price decline after a rise. An ordinary speculator at such a moment often closes the position, while a state buyer, on the contrary, takes more.
For a trader, this is constant demand in the gold order book, which intensifies precisely on the decline.
Why is this notable?
The motive is different. A central bank doesn't buy on a schedule or for speculation. Gold goes into state reserves instead of dollar assets.
- Doesn't take profit - the goal isn't to earn on the move
- Doesn't close the position on a stop-loss - there's no account loss for it
- A cheap price - a reason to take more, not a reason to leave
What does this mean for a trader?
Dips are bought up not only by traders. On XAU/USD, alongside ordinary speculators stands a structural buyer. The entry price matters more to it than timing.
The main point: demand for gold grows precisely where the price falls. This changes the behavior of pullbacks on XAU/USD.
You can check the date of the next report and other market events in the economic calendar.
What's next?
The streak is counted by reports. China publishes reserve data every month. Then there are two options:
- Purchases continued. The streak extends by another month.
- No purchases. The streak breaks for the first time in two years.
Any outcome moves gold. That's why the reserves report is worth keeping on your list of events for the metal.
Have you been trading this pullback in gold?
The logic is simple: the main buyer accelerates where retail is giving up positions. But you can only trade this pullback with the volume you have. A move of several dozen dollars per ounce on a personal deposit turns into a sum that's awkward to talk about. Prop trading works differently: the company tests you in a selection process and afterward opens an account of its own size under its own loss limits, and you split the profit under a contract. It's worth understanding the mechanics before gold gives the next such entry.